Managerial Accounting Formulas and Costing Methods
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Chapter6: Absorption: DM+DL+Varaible MOH+Fixed MOH.....Variable: DM+DL+VariableMOH...
ROI=Net op income/avg op assets...... ROI=(net op income/sales)*(sales/avg op assets)
Residual Income= Net op income-(avg op assets*min required rate of return)
units sold to get 16% ROI: OI=sell price(X)+variable cost(X) - fixed exp
avg op income: cash,A/R, inv, p&e, other productive assets...
CM approach for add/drop: cm lost if dropped- fixed costs that can be avoided(salary, adv, rent-factory space)= net disadvantage/advantage
Sell and proc. Further: sale value after further proc-sales value at split point=incremental rev- cost of further proc=profit(loss) from further proc
break even unit/dollars: fixed exp/cm per unit= unit sales...... Fixed exp/cm ratio= dollar sales
balanced score card: management translates its strategy into performance measure that employees understand and influence
Special orders: 1. Find VC per unit 2. Increase in revenue (sell price* quanity) - increase in costs (VC*quanity)= increase/decrease in net income
Transfer Price: lowest possible transfer price= 10+(0/1000)=10... 10-20(cost of buying from outside supplier)...VC+(0/quanity)=VC
sacrificing customer orders to meet demand of 1000 crates (no range)= 10+(((25-10)*1000)/1000)=25.... VC+(((sell price-VC)*Q)/Q)
half on idle half to sacrifice from customer 500/500 (range)=
10+(((25-10)*500)/1000)=17.50 17.50-20 (cost of buying from supplier)
If VC goes down: (VC-change in VC)+(((sell price-VC)*Q)/Q)= transfer price---max transfer price
Variable costing contribution format IS: Sales/less variable expenses (variable COGS, Variable selling and admin)/total variable exp/CM/less fixed exp: (fixed MOH, fixed selling and admin)=Net OP income
Absorption costing IS= sales/less COGS/Gross Margin/less selling and admin: (fixed, variable)/= net operating income
Incremental OI=(increased unit sales*cm per unit)=incremental CM-fixed exp=incremental net income
inventory decreases= avg op assets decrease.... Increase in savings= increase in net operating income..Decrease in prod cost= increase in net op income....Purchase of machine&equip= increase avg op assets....... Inv scrapped= decrease in net op income and avg op assets